Nunavut Company operates a chain of cozy coffee shops.The company's chief executive officer is interested in accumulating some information on the overhead costs incurred by the company.You have been asked to analyze the following six months' worth of data.
Required:
A. Using the high low method, construct a cost formul a for the total overhead cost. The CEO would like to limit total overhead cost in future months to $20 \%$ of total
B. revenues. Will that be possible if total revenues are expected to average $\$ 300,000$ per month and total labour hours per month are expected to average 1,000? Show all of your calculations.
C. Compute the total cost of overhead assuming 1,000 labour hours are incurred in a given month.

Question

Nunavut Company operates a chain of cozy coffee shops.The company's chief executive officer is interested in accumulating some information on the overhead costs incurred by the company.You have been asked to analyze the following six months' worth of data.
Required:
  A. Using the high low method, construct a cost formul a for the total overhead cost. The CEO would like to limit total overhead cost in future months to $20 \%$ of total
B. revenues. Will that be possible if total revenues are expected to average $\$ 300,000$ per month and total labour hours per month are expected to average 1,000? Show all of your calculations.
C. Compute the total cost of overhead assuming 1,000 labour hours are incurred in a given month.

Quizplus · Accepted Answer

The Answer of Nunavut Company operates a chain of cozy coffee shops.The company's chief executive officer is interested in accumulating some information on the overhead costs incurred by the company.You have been asked to analyze the following six months' worth of data.
Required:
  A. Using the high low method, construct a cost formul a for the total overhead cost. The CEO would like to limit total overhead cost in future months to $20 \%$ of total
B. revenues. Will that be possible if total revenues are expected to average $\$ 300,000$ per month and total labour hours per month are expected to average 1,000? Show all of your calculations.
C. Compute the total cost of overhead assuming 1,000 labour hours are incurred in a given month.

Nunavut Company Operates a Chain of Cozy Coffee Shops 20%20 \%20%

Nunavut Company Operates a Chain of Cozy Coffee Shops $20 \%$